How do Big Three auto companies fix the problems?

Only the consumer can do that, which is why it is not a complex problem if we answer a few basic questions:

1. Do they build a car you want?

2. Do they build it for a price you are willing to pay?

3. Do they offer acceptable financing?

4. Do you expect them to survive?

Let us assume the answers:

1. Maybe.

2. No.

3. No.

4. No.

This then begs the question: How do the Big Three fix the problem in the three months of breathing space the Bush administration loan is giving them? True, only GM and Chrysler are participating, but what is good and necessary for them will be good and necessary for Ford.

1. It is impossible in that time frame for them to create new models.

They will have to go with what they have and with what new models are already scheduled for introduction.

2. They can demand and receive monetary concessions from labor and vendors that will allow them to immediately slash car prices. Also, lower pay and lower vendor prices can be further reduced by paying a portion of these obligations with stock, a method that GM can utilize, but Chrysler cannot because it is no longer a public company. Chrysler management may want to consider becoming public once again. In the end, the employees and vendors already have a stake in the Big Three, because they will do well only if the companies do well. So they may as well formalize that link and take stock.

3. The Big Three can work with the de facto car czar, Treasury Secretary Henry Paulsen Jr., to convince the banks to loosen up credit. Needless to say, with the Fed lowering the discount rate and the Treasury funneling funds into the banks, this should not be a hard sell.

4. Low prices and low interest loans will trump questions of survivability. And if the sales and profit news is improving by March, the survivability question will disappear. Then the Big Three can press on with the development of a new generation of better built, more fuel efficient (both gas and alternative energy), safer, less costly cars.

Remember, necessity is as important an incentive as the profit motive, which is what will make these previously unattainable solutions attainable now.

Distributed by U.S. News Syndicate, Inc.

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